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Footlocker To Struggle From Nike’s Shift To DTC

Footlocker To Struggle From Nike’s Shift To DTC

Footlocker is still feeling the effects of Nike’s accelerated shift to a direct-to-consumer (DTC) model, despite total sales increasing by 6.9% to US$2.3 billion in 2021.

However, due to the continuous shift in sales, the footwear retailer expects total sales to be down 4% to 6% and comparable sales growth to be down 8% to 10% in 2022.

Commenting on the fourth quarter performance and fiscal year, Footlocker CEO and chairman, Richard Johnson, said: “We closed out a record year by delivering solid fourth quarter results that reflect the ongoing momentum we have built in our business in the midst of an evolving market.”

“We made significant progress diversifying our brands, categories and channels in 2021, as well as expanding our customer base across demographics and high-growth geographies with the acquisitions of WSS and atmos.

“We also invested in our omni-channel platform to accelerate our DTC strategy and enhance the customer experience with new speed and convenience capabilities.

“And we continue to expand our private label merchandise offerings, including the most recent launch of our new womenswear brand,” he said.

In the report, Footlocker mentioned they don’t expect any one vendor to represent more than 60% of total purchases, which is down 10% from the fourth quarter in 2021.

The retailer also made it clear they will continue to broaden their assortment of products, with exclusive access to Reebok’s basketball footwear and the continuation of LaMelo Ball’s exclusive program with Puma.

Footlocker also saw an increase of merchandise inventories by 37.2% to US$1.3 billion, which will help the company take demand head on in the 2022 fiscal year.

With Nike cutting ties with Amazon in November 2019 after a two-year trial period and several retail partners joining the list in 2020, including: Belk, Dillard’s and Zappos, it looked worrying for the footwear retailer.

However, Johnson told analysts that Footlocker will receive marquee Nike products, but with fewer units as the sports apparel brand moves its most popular lines to DTC.

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